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Policing or vigilante justice?

Steve May | May 31, 2005

In the effort to distinguish between legitimate companies and snake-oil sellers — and to lessen the harm caused by false product claims — a movement toward policing and self-policing has emerged. But, Steve May asks, who is policing the police? And who is to say what constitutes a ?legitimate? claim?

The latest buzzword in our industry is ?self-policing.? We all know of companies who engage in misleading advertising, make outright false claims, flagrantly violate the law and sell products that don?t meet label claims. Those of us engaged in the legitimate conduct of business are justifiably concerned with the damage these bad actors cause to our industry as well as the unfair competition from which they benefit.

However, in the wake of the ConsumerLab.com controversy, we need to ask ourselves whether self-policing will result in better legal compliance or dangerous vigilante justice.

Vigilantes and the Old West Here in Arizona, 500 vigilantes dubbed Minutemen are patrolling the border with Mexico in an attempt to stop illegal immigration. These self-conscripted citizens have gathered out of frustration with the federal government?s lack of effective enforcement of immigration laws and border security. To these citizens, the government just wasn?t doing enough. Their task is not to detain the border crossers, but simply to report them to the proper authorities.

They have failed to achieve tangible results because the border is so large and because the demand for cheap labour is so great. The well-intentioned vigilantes can?t control the forces that have created the situation.

My family has been in this industry as a small entrepreneurial company since 1982. This industry was started and grown by people who made claims for their products that were unbelievable at the time. Some claims turned out to be true, others proved false. Many millions of people benefited from these products. Of course, almost all claims for product efficacy were universally derided by the establishment media and medical professions. Many of the large companies today were started by individuals who made outrageous claims based on anecdotes or testimonials.

Today, as then, some companies make claims that are patently false or misleading. I am endlessly frustrated with the TV and print ads I see from fairly large companies making claims that are knowingly false, giving consumers false hope that their physical or emotional shortcomings can be solved with a pill or cream, charging exorbitant prices and declaring an impending shortage of supply.

I recently met with an advertising executive who explained that our firm should start advertising in this manner since others were making so many millions. When I asked about the legal and ethical problems associated with this approach she told me that I should simply do what others have done: set aside a large sum of money in order to pay the fines and legal fees that would inevitably follow. The profits would exceed the additional expense.

No thanks, I will pass.

The need for police I fully support industry regulations as passed by the government. I think there are still some problems. Our laws fall short in some areas and overreach in others. Our industry needs to remain united in lobbying for effective reform. That reform needs to address the interests of consumers and all manufacturers, not just the large companies that benefit by creating additional obstacles to entry by entrepreneurial firms.

I have been lectured by lawmakers about the bad actors in our industry — whether that is those who made products that were unsafe or those who preyed on the na?ve consumer. I am frustrated by the media?s constant harangue that our industry is not regulated. I understand that the health of our industry requires that we rid ourselves of the rotten apples who threaten to sicken all of us.

The Food and Drug Administration and the Federal Trade Commission have the legal obligation to enforce the laws under which we are regulated. Like the border patrol, the government?s assignment in our vast country is far too great a task for them to achieve with much success. Like many police and prosecutors, they choose either the low-hanging fruit or the truly dangerous. Because of this, enforcement is not fair across the board. It?s simply a fact of life.

Everyone files tax returns but few are audited. Nonetheless, the penalties of noncompliance are severe enough that all but a small minority spend sizable sums of money and time complying with the law. Some cheaters will be caught and some will not. Each filer must make a decision about the risk of noncompliance.

Because our company imports some of our products as finished goods, we are inspected on a regular and frequent basis by the FDA as part of the anti-terrorism initiative. Each agent has his own idiosyncrasies and his own interpretation of the regulations. We spend a considerable amount of time and money complying with varying and often vague demands that many of our competitors do not suffer because they are not inspected. It isn?t fair, but it is the way it is. We are happy to do what we must to comply with the regulations as we and the FDA interpret them without regard for what others choose to do.

Private police force Consumerlab.com, a private for-profit entity, was the subject of a recent FTC complaint by an industry trade association, the Council for Responsible Nutrition (CRN). CRN alleged that Consumerlab played favourites and demanded payments from companies reluctant to participate. In essence, CRN claimed that Consumerlab was a for-profit enterprise and not a watchdog. Consumerlab is a business and it is easy to question their motive, but Consumerlab noted to the FTC that CRN is merely an association of businesses interested in protecting their profits. The FTC refused to take action on CRN?s complaint. So who is policing the police? Who do we trust? Is anyone really an independent, disinterested third party?

Recently, industry leaders joined forces to form yet another watchdog organization, the Natural Products Foundation (NPF). Their intentions are certainly pure and their leaders are well respected. Their first assignment is to self-police advertising. The challenge here is that there are many different interpretations of what is legitimate and what is not. Every lawyer I speak to gives me a different opinion. In the end, no one can get in the mind of the FDA or FTC and predict what will pass.

Yes, there are some black-and-white cases in this area, but much of the industry?s advertising lies in a grey area.

The board members of the NPF all have economic interests they seek to protect. Some have direct competitors. I don?t allege any malice on the part of any individual, but can they be truly independent? To whom do we appeal a decision made by the NPF? I asked this question of a board member and was told there is no appeals process. They will work with the advertising media to instruct them what can or cannot be published. As representatives of companies who purchase large amounts of media, I?m sure the publishers will listen intently to them.

When I asked a board member what would happen if someone used the organization to advance themselves while hurting a competitor, I was told, ?They will be shot!? While this was certainly a flippant comment in reply to what she felt was a preposterous question, I don?t see that there are any safeguards in place to protect us from the self-appointed and unregulated police.

Is the US a free market? At some point we have to decide if consumers in the US have any responsibility on their own for the purchasing decisions they make. As for me, I would like to be free to consume whatever foods or supplements I want and apply any cream I desire. I don?t feel the need to rely on the government or some industry watchdog to tell me if something will work or not. I can figure that out on my own. In this whole conversation we?ve had about self-policing we have forgotten to ask the consumer what she wants. Consumers want products that work and will not cause harm. They don?t want to be lied to, but they also want to know if there is any chance a product might work for them — because it might have worked for others.

We do need to support industry efforts to fully fund the enforcement mission of the government. At the same time, we need to work with the government to ensure that the regulations are clear and necessary. We should not rely on the government or any industry organization to protect consumers from their own bad choices or to protect industry members from each other.

We should not rely on the government or any industry organization to protect consumers from their own bad choices

Instead of self-policing and pointing fingers, why don?t we let the government do its job, and all agree that we will offer a money-back guarantee to all consumers with no questions asked? We have done this at our company for many years with success. Some consumers return products due to taste issues. Others return products because they didn?t do for them what they hoped they would do. Note that they are not dissatisfied that a product didn?t meet our own claim, but they had in their own mind that the product should do something that it didn?t. Some consumers have unreasonable expectations, but most do not.

Many of the worst companies in our industry end up having to repay consumers anyway. Why don?t we just offer this up front? Those companies afraid to do so will be exposed by the market, and consumers can make an informed choice.

This is America, isn?t it?

Steve May is chief operating officer of Arizona-based Wisdom Natural Brands, the leading US manufacturer of stevia. www.wisdomnaturalbrands.com Respond: [email protected] All correspondence will be forwarded to the author.